Dow Futures Drop As Investors Grimace Over McDonald’s

By Johanna Bennett

McDonald’s (MCD) is giving investors cause to grimace this morning. U.S. stock futures turned lower Monday after the fast-food giant, a component of the Dow Jones Industrial Average component, reported disappointing second quarter earnings.

McDonald’s share price fell 2.9% to $97.35 after the company said it earned $1.38 a share, which missed the $1.40 mark expected by analysts polled by FactSet.

Erasing gains earlier in the morning, futures for the Dow fell 0.1% to 15.491.

Those for the S&P 500 index, however, rose 0.1% to 686.75 and the Nasdaq Composite rose 0.11% to 3,044.

Changes in futures don’t always accurately predict early market moves after the opening bell.These upward moves come after the S&P 500 delivered another day of gains on Friday to close at an all-time record high despite a lackluster earnings report from tech giant Microsoft (MSFT).

This will be a busy week for investors with a parade of companies on tap to release earnings reports. This morning alone, reports have been released by Halliburton (HAL), Hasbro (HAS), Gannett (GCI) and Kimberly Clark (KMB).

The U.S. economy improved slightly in June, as the national activity index rose to negative 0.13 from negative 0.29 in May, according to the Chicago Fed.

Meanwhile, at 10 a.m. EDT, existing-home sales for June are expected to show a rise of 1.9% on the month. The health of the housing market came under question last week after data showing June housing starts fell to the lowest level since August 2012.

But right now, investors are contending with a string of disappointing earnings reports.

McDonald’s warned investors that it sees a challenging year ahead. Global same-store sales increased 1%, while analysts were expecting a 0.8% rise. Same-store sales in the U.S. rose 1%, short of the analysts’ 1.5% growth estimate, due in part to a tough comparison against prior-year promotional activity.

Hasbro, home to brands such as G.I. Joe and Mr. Potato Head, posted a lower-than-expected quarterly profit Monday on weak demand for its toys for boys, becoming the third toymaker to fall short of Wall Street expectations in the second quarter. The shares fell 2.4% to $44.25.

Other companies fared better, Halliburton rose 0.9% to $46.23 as busy global oilfields shielded the world’s second largest oil services company from the U.S. gas glut.

Kimberly Clark, best known for its Kleenex tissues, posted a higher-than-expected quarterly profit on Monday, as cost savings helped offset the negative impact of foreign exchange rates. The consumer products maker earned $1.41 per share for the second quarter, excluding certain items, two cents above estimates, helped by improved results in international markets.

Activist shareholders also made plenty of news.

Reuters reports that activist shareholder ValueAct Capital Management has held talks with Microsoft directors about its demands for a seat on the board. The stock had its biggest one-day drop in four years on Friday following its quarterly earnings.

At Navistar International (NAV), investors Carl Icahn has increased his stake in the heavy equipment maker up to $16.55% from 15.54%.

Starwood Capital CEO Barry Sternlicht has reportedly submitted a bid for luxury department store chain Saks (SKS) the retailer, according to the New York Post. The stock rose 8.2% to $15.89

And Boeing (BA) remains a name to watch as the FAA decides to follow the recommendation of British officials and call for inspection of the Emergency Locator Transmitters on Boeing 787 jets. The stock fell 0.3% to $106.64.

Copyright 2015 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our
Subscriber Agreement
and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit